ture is right for them as opposed to who sits in the OvalOffice or controls Congress. That said, all businessesare concerned about how laws and policies mightaffect them.”“The uncertainty with the impact on the domesticeconomy with the change in the White House is prob-ably behind us now,” Sum says. “The stock marketshave ramped up since the election and now are athistoric highs, a sign of anticipated and continued busi-ness growth and investor confidence. We see the sametrend in the middle market businesses we finance.”We asked our panelists to share their thoughtsabout a potential lessening of government regulatoryand compliance rules. “There is an increased scrutiny ofhighly leveraged transactions and a possibility of penal-izing banks that finance such transactions,” Seidensays. “It would be helpful to relax some of those rules aswe compete against finance companies that don’t havethose regulatory restraints. Tax law changes would behelpful if they lower tax rates on businesses or allow therepatriation of cash from overseas.”“Regulatory compliance on companies affectseveryone differently,” Hoefler says. “For banks, itmeans, among other things, that a portion of anyunderwriter/portfolio manager’s time must be spent oncompliance and regulatory issues. Without a doubt, thelevel of compliance and time spent has increased overthe years. If there was a retreat on some of those rules,it might lighten the day-to-day workload.” > >“The credits we have booked are performing well,”Sum says. “There has been a vigorous pace of acquisi-tions of companies by investors and mergers of compa-nies in similar businesses. This may be attributed tofactors such as historically low interest rates, retirementof selling owners or the need for businesses to realize orenhance additional sales and purchasing power in orderto remain competitive. This trend will likely continueto benefit asset-based lenders throughout 2017. If youare looking for a good gauge of the health of the ABLindustry and the economy, take a look at the perfor-mance of the staffing/employment companies. Theyplace more people in jobs in good times and exhibitstrong financial performance.”Paying attention to macro events and watchingmarketplace trends that could affect customers takesprecedence for underwriters. Hoefler cites forestry andthe resulting products such as paper as an example. “Atariff currently under discussion relates to the softwoodlumber trade between the U.S. and Canada, and thisis an important issue for us. There is a similar focus forthe entire metals industry as it relates to Section 232.We track and monitor other trends, such as what ishappening in retail, through our borrowers’ financialstatements. We stay familiar with the ups and downs ofany cycle that affects a particular industry in our port-folio. Our industry verticals within BMO Harris provideanother source of information.”

Post-Election Optimism?

Seiden says there was strong business optimism just
after the election, but now borrowers sense risks associated with this administration. “They don’t know how
tariffs and alliances with other countries will change. If
a company has had the same trading partners for two
years, will they still have them two years from now?
Will it be harder for some businesses to import their
products? These uncertainties have kept growth at bay.

“There are also concerns about undocumentedworkers and whether there will be increased costs forsome industries,” he continues. “We have clients in thefood industry who are unable to get the products theyneed because farmers don’t have enough workers toharvest the crops. Whatever your feelings about immi-gration, there will be an impact on production. Ourretail clients are experiencing changes in their industry.These companies need to find a way to stick out in thecrowd, manage their inventory better than ever and offerservices as well as products.”“From what I have heard anecdotally from middlemarket companies, they don’t necessarily care who isin office,” Hoefler says. “They keep a tight focus oncontrolling overhead and growing revenue. When theymake a CAPEX decision, it has more to do with theirindividual business and whether or not that expendi-

“We’ve been fortunate to see a strong uptick in new business over the last yearor so. Through June, we are probablygoing to fund the same number of deals we did for all of 2016. It’s amatter of keeping that pipeline as strong as it has been in the secondquarter and carrying it into the third and fourth quarter.”